Presented below are two independent situations: (a) On January 1, 2020, Flint Inc. purchased land that had an assessed value of $ 363,000 at the time of purchase. A $ 561,000, zero-interest-bearing note due January 1, 2023, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%. Determine at what amount the land should be recorded at January 1, 2020, and the interest expense to be reported in 2020 related to this transaction. (Round answers to 0 decimal places, e. g. 38,548.) Land to be recorded at January 1, 2020 $ 363000 Interest expense to be reported $ (b) On January 1, 2020, Buffalo Furniture borrowed $ 5,800,000 (face value) from Sinise Co., a major customer, through a zero-interest-bearing note due in 4 years. Because the note was zero-interest-bearing, Buffalo Furniture agreed to sell furniture to this customer at lower than market price. A 10% rate of interest is normally charged on this type of loan. Prepare the journal entry to record this transaction.
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Presented below are two independent situations: (a) On January 1, 2020, Flint Inc. purchased land th...
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